This adjudicatory proceeding arises out of a petition filed with the Superintendent
by Portland Airport Limousine Co., Inc., d/b/a Palco Air Cargo,
pursuant to 24 A M.R.S.A. §§ 229 and 2320(3), requesting that
the Superintendent order Palco’s former workers’ compensation
insurer, Star Insurance Company, to lower its workers’ compensation
premium for the policy covering Palco from August 20 until November 1,
2002. Based on the evidence adduced at the hearing held today1,
the petition is granted on the ground that Star has waived its right to
impose the rate increase at issue.

Palco describes its core business as “picking up and delivering
packages from the airport,” mostly within Maine and New Hampshire.
Its largest customer is L.L. Bean. Historically, its business has been
classified for workers’ compensation rating purposes in Code 7231
(Trucking – Mail or Parcel Delivery) in the uniform classification
system for workers’ compensation insurance rating.2

Palco first obtained insurance with Star Insurance Company for the 2001–02
policy period. Initially, this coverage was rated, like Palco’s
prior coverage, as Mail or Parcel Delivery. However, Star conducted a
site visit in the fall of 2001, after the policy was in force, and learned
that Palco hauls packages in large quantities using tractor-trailers,
occasionally as far as New York and New Jersey, and that its activities
for L.L. Bean include picking up containers at the Auburn freight terminal
and hauling them to an L.L. Bean distribution facility.

The coverage was placed through Ernie Jordan of the Chalmers Agency.
Neither Mr. Jordan nor the Chalmers Agency is a party to this proceeding,
and Mr. Jordan was not called as a witness by either party. Each party
has offered credible and consistent testimony regarding its dealings with
Mr. Jordan. Based upon this testimony, I find that Star decided that it
would not be appropriate to change the rate midterm because Star competed
for the Palco account quoting the rates for Mail or Parcel Delivery, but
that Palco would be reclassified for the following year as Code 7229 (Trucking
– Long Distance Hauling), at a substantially higher manual rate.
Star promptly communicated that decision to Mr. Jordan, but he did not
warn Palco. The following July, Star sent Mr. Jordan a renewal quote for
Palco, which Mr. Jordan did not forward for at least three weeks. According
to Palco, the first notice of the rate increase was received on August
15, only four days before the last day of coverage. According to Star,
Mr. Jordan recently advised them that he recalls having sent notice on
August 5. Even if this is accurate, however, it is undisputed that Mr.
Jordan delayed forwarding the notice until well after the deadline established
by the Maine Insurance Code, 24 A M.R.S.A. § 2908(4).

The statutory remedy for this violation is the right to replace the
coverage with another insurer, without penalty, and to obtain a 30-day
interim extension of coverage at the lower rate with the prior insurer,
subject only to such general rate adjustments as are applicable to the
entire class of business. However, after consultation with Mr. Jordan,
Palco requested additional time to shop the account, and obtained replacement
coverage (rated as Mail or Parcel Delivery) effective November 1, 2002,
which was 78 days after Palco claims to have first received notice. It
was Palco’s understanding, based on its communications with Mr.
Jordan, that this would not be a problem and that Star would continue
to cover Palco as Mail or Parcel Delivery during this period. Unfortunately,
Mr. Jordan did not communicate the request to Star, which had it know
would have denied the request.

Mr. Jordan was acting as Star’s agent in this matter. 24-A M.R.S.A.
§§ 1445(1)(D) & 2422(2). Accordingly, he had the power to
extend the 30-day deadline on Star’s behalf for a reasonable period
of time, and I find that he did so.

Order and Notice of Appeal Rights

It is therefore ORDERED:

The Petition is GRANTED.

Star shall bill Palco for the 2002–03 policy on a pro rata
basis for the period of coverage, using the rates in force on August
20, 2003 but applying Code 7231 (Trucking – Mail or Parcel Delivery)
together with any applicable exceptions in a manner consistent with
the prior policy.

This Decision and Order is a final agency action of the Superintendent
of Insurance within the meaning of the Maine Administrative Procedure
Act. It is appealable to the Superior Court in the manner provided in
24-A M.R.S.A. § 236 (2000) and M.R. Civ. P. 80C. Any party to the
hearing may initiate an appeal within thirty days after receiving this
notice. Any aggrieved non-party whose interests are substantially and
directly affected by this Decision and Order may initiate an appeal on
or before August 6, 2003. There is no automatic stay pending appeal; application
for stay may be made in the manner provided in 5 M.R.S.A. § 11004.

1 Pursuant to 24-A M.R.S.A. § 210, the
Superintendent has appointed Bureau of Insurance Attorney Robert Alan
Wake to serve as hearing officer, with full decisionmaking authority.

2 Pursuant to 24-A M.R.S.A. § 2382-B,
workers’ compensation insurers must adhere to a uniform classification
system approved by the Superintendent and administered by the designated
workers’ compensation advisory organization, which is the National
Council on Compensation Insurance (“NCCI”).